BLBD Q2 2025: Tariffs Hit EV Margins, $25K Price Cut, Q4 Upside
- Experienced Management Leadership: CEO John Wyskiel’s extensive operational background, including his direct experience running a Blue Bird bus plant, positions the company to drive potential margin improvements over the longer term.
- Diversified Product Portfolio Resilient to Tariff Headwinds: The ability to substitute EVs with ICE and propane models when facing tariff-related challenges provides flexibility in preserving win rates and sustaining revenue.
- Strong Brand Loyalty and Dealer Collaboration: With a well-established base—evidenced by over 20,000 propane-powered buses in operation—and strong, collaborative relationships with dealers, Blue Bird is positioned to maintain its market leadership despite industry headwinds.
- Tariff Uncertainty Impacting EV Margins: The executives acknowledged significant tariff headwinds on EV components (notably from China) that may force them to delay or substitute EV production with ICE units, potentially eroding future margins and revenue upside.
- Uncertainty Over Future EPA Rounds: There is uncertainty surrounding the timing and awarding of EPA Clean School Bus Program rounds 4 and 5. This lack of clarity could delay EV orders and reduce near-term growth in the high-margin EV segment.
- EV Mix and Production Risk: The guidance adjustments reflect a risk that if tariffs do not resolve favorably, the intended EV build volume could fall short, forcing substitution with ICE buses. This shift may undermine the EV segment's contribution to long‑term profitable growth.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Net Revenue | FY 2025 | $1.45 billion | No guidance provided in Q2 2025 | no current guidance |
Adjusted EBITDA | FY 2025 | $200 million, with a 14% margin | No guidance provided in Q2 2025 | no current guidance |
EV Unit Sales | FY 2025 | 1,000 buses | No guidance provided in Q2 2025 | no current guidance |
Total Units | FY 2025 | 9,250 | No guidance provided in Q2 2025 | no current guidance |
Adjusted Free Cash Flow | FY 2025 | $40 million to $60 million | No guidance provided in Q2 2025 | no current guidance |
Medium-Term Outlook | FY 2025 | Up to 10,000 units, $1.6 billion revenue, $225 million EBITDA | No guidance provided in Q2 2025 | no current guidance |
Long-Term Target | FY 2025 | $1.85–$2 billion revenue; 11,000–12,000 units; EBITDA $270–$300+ million; margin 14.5–15% plus | No guidance provided in Q2 2025 | no current guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Federal Funding & Regulatory Uncertainty | Q1 2025, Q4 2024, and Q3 2024 consistently detailed the Clean School Bus Program funding rounds and bipartisan support, noting both strong inflows and some timing uncertainties for future rounds. | Q2 2025 confirmed that funding for rounds 2 and 3 is flowing as expected while acknowledging regulatory uncertainty for later rounds (4 and 5). | Consistent optimism with cautious outlook for upcoming rounds. |
Tariff Risks & Trade Uncertainty Impacting EV Margins | Q1 2025 mentioned potential tariffs in moderate terms with plans to pass costs to customers ; Q4 2024 and Q3 2024 did not address tariff risks. | Q2 2025 saw a major escalation with tariffs at 145% on Chinese imports, driving prices up by over 10% and prompting a shift from EV to ICE production. | Escalation in severity—an increasingly negative impact on EV margins compared to previous discussions. |
EV Production Mix & Conversion Risks | Q1 2025 reported a low EV mix (6%) with expectations for growth, while Q4 2024 and Q3 2024 noted steady/increasing EV order backlogs and incremental increases in EV share. | Q2 2025 highlighted record EV sales (265 units) but also signaled conversion risks by planning to substitute EV production with ICE buses in Q4 due to tariff pressures. | EV growth remains strong, but external pressures (e.g., tariffs) are heightening conversion risks. |
Diversified Product Portfolio & Powertrain Options | Q1 2025 and Q4 2024 emphasized a broad portfolio—covering diesel, gasoline, propane, and EVs—with strong strategic positioning; Q3 2024 did not explicitly mention this topic. | Q2 2025 reiterated the focus on a diversified lineup and announced developments like a new commercial chassis for 2026. | Consistent strategic emphasis with stable sentiment across periods. |
Operational Efficiency & Margin Expansion | Q1 2025, Q4 2024, and Q3 2024 discussed lean manufacturing, cost management, and margin improvements, achieving record EBITDA margins and robust gross margins. | Q2 2025 reported a record adjusted EBITDA margin of 14% and a gross margin improvement, even while managing challenges such as higher tariffs and labor costs. | Continued and even accelerating efficiency improvements driving strong margin expansion. |
Pricing Strategy & Customer Acceptance | Q1 2025, Q4 2024, and Q3 2024 outlined proactive pricing increases (e.g., regular adjustments and significant average selling price hikes) with solid customer and dealer acceptance. | Q2 2025 implemented a 2% tariff surcharge and an additional 2% general price increase on new orders while maintaining competitive pricing and strong dealer collaboration. | Stable, proactive pricing measures continue to resonate well with customers. |
Supply Chain, Labor & Cost Pressures | Q1 2025, Q4 2024, and Q3 2024 consistently portrayed effective supply chain management (with strategic inventories), labor cost adjustments post-USW agreement, and pricing actions offsetting inflation and rising material costs. | Q2 2025 highlighted a more fragile supply chain, exacerbated by severe tariffs, alongside increased labor and material cost pressures. | Persistent challenges remain, with recent intensification of supply chain stress due to higher tariffs. |
EV Order Pipeline & Delivery Timing Uncertainties | Q1 2025 and Q4 2024 described robust EV order backlogs with funding and infrastructure uncertainties causing some delivery delays; Q3 2024 noted shifts in delivery timelines to later fiscal periods. | Q2 2025 reported a strong order pipeline with a 700-unit EV backlog but continued uncertainties in delivery timing due to tariff impacts and extended EPA funding rounds, possibly deferring some builds to fiscal 2026. | Strong pipeline persists while timing uncertainties remain a recurring challenge. |
National Fleet Business Expansion | Q3 2024 discussed an expansion in the national fleet business, driven by competitive propane and EV offerings and attractive delivery timings for school starts. | Q2 2025 (and Q1 2025, Q4 2024) did not mention this topic. | Topic appears to have dropped out in recent periods. |
Management Leadership & Brand Loyalty | Q4 2024 emphasized strong management leadership and robust brand loyalty; Q1 2025 included indirect references, and Q3 2024 did not explicitly mention the topic. | Q2 2025 reintroduced leadership themes with the new CEO’s vision and reinforced brand loyalty through the success of propane models and robust customer relationships. | Focus has fluctuated, with a renewed emphasis in Q2 2025 after a period of less explicit discussion. |
Shifting Sentiment on the Electric Transition | Q1 2025 hinted at growing EV orders and record backlog growth, while Q4 2024 and Q3 2024 did not explicitly examine sentiment shifts regarding the electric transition. | Q2 2025 did not explicitly address shifting sentiment; however, record EV sales imply a continued positive outlook on the electric transition. | Minimal explicit discussion—sentiment appears stable but is only implied through robust EV order numbers. |
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EV Pricing Performance
Q: Are EV prices on track despite tariffs?
A: Management noted they reduced EV prices by about $25,000 but current tariffs have slowed further price reductions, delaying the full benefit of the cost‐reduction plan. -
Q4 Guidance Upside
Q: Is Q4 upside possible if EV tariffs ease?
A: They indicated that if the EV tariff situation improves soon, there is real upside in Q4 with additional orders in the backlog, potentially pushing guidance upward. -
Margin Improvement Prospects
Q: Can margins be further improved beyond guidance?
A: The CEO expressed caution, stating it’s too early to quantify further margin gains despite his strong operational background, with improvements expected gradually as efficiencies roll out. -
EV Production Substitution
Q: Will ICE buses replace any shortfall in EV production?
A: The team confirmed that if EV builds are reduced due to tariffs, ICE and propane orders will fill those gaps, ensuring overall volume remains robust. -
Clean School Bus Funding Mix
Q: What’s the split in Clean School Bus funding?
A: They reported a balanced mix, roughly 50/50 between state and federal sources, with rounds 2 and 3 fully flowing, although later rounds remain less certain. -
Dealer Network Reaction
Q: Are dealers pushing back on price increases?
A: Management emphasized that dealers have remained collaborative despite the modest 2% price hikes, and similar actions are seen across the industry. -
Clean School Bus Future Rounds
Q: What’s the outlook for future Clean School Bus rounds?
A: While rounds 2 and 3 are already underway, rounds 4 and 5 are still in early stages with funding applications collected, leaving the final details uncertain. -
Supplier Cost Sharing
Q: How are supplier cost discussions going?
A: They explained that cost-sharing conversations are handled individually by supplier and component, with no single universal approach emerging yet. -
Commercial Chassis Drivetrain Preference
Q: Which fuel does the new chassis favor?
A: Early customer feedback shows a preference for propane over EV options, likely influenced by ongoing tariff challenges affecting EVs. -
Accelerated Buyback Impact
Q: How does the remaining $20m buyback affect cash?
A: The company accelerated its repurchase program, with $20 million still pending; further details will be shared in the next update.